1.6 TRILLION IN U.S. STUDENT LOAN DEBT
As Democratic Party presidential candidates promise to cancel Americans’ $1.6 trillion in student loan debt, President Donald Trump wants to end the Public Service Loan Forgiveness program and eliminate subsidized federal loans.
The president has proposed dropping the loan forgiveness program in every budget he’s submitted, including the 2021 fiscal year proposal released last week. Congress has not acted on his recommendation.
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Created in 2007, the program forgives student debts once participants complete 10 years of monthly payments while employed full time as teachers, nurses, police officers, or as nonprofit or government workers. The first eligible borrowers started claiming their benefits in the last three years.
But those claims have not gone smoothly for many who say they made their 10 years or 120 payments only to learn they did not meet the program’s complex eligibility rules.
Librarian Lynn Wallace has student loan debt and complained in the Tulsa World about the program’s complex regulations: “Fraudulent information about the Public Service Loan Forgiveness has left me with five extra years in repayment status.” Only 62 of her 118 payments counted toward the required 120, she said.
Trump and other critics of the program say it unfairly favors some careers over others. This year’s budget proposal, like those in previous years, recommends closing the program to new applicants while keeping it open for current participants like Wallace.
The president’s proposed budget also calls for the elimination of federally subsidized loans, in which the government pays the loan’s interest while students with financial need attend school or qualify for grace periods. The changes would end complicated formulas that determine which type and amount of loan qualify for subsidies, but the burden for repaying the interest would shift completely to the student.
Other proposed changes would reward faithful repayment and protect students and parents from overborrowing in the first place. These changes would cut the U.S. Department of Education’s budget by 8 percent.
Borrowers shouldn’t plan for these reforms anytime soon. The president’s proposed budget is merely the first step in a lengthy process governed by competing ideologies.
(Excerpt from World. Article by Lauren Edghill.)
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